1. Cost Accounting Joint Product & By Product Lecture-25 Mian Ahmad Farhan (ACA)

2. Input Output Joint Product By Product Considerable Significance Incidental Produce Example: Crude Oil (Diesel & Petrol) Example: Sugarcane Juice (Husk or Pulp is a by product)

3. Process Accounting Department A (Cost Accumulated) Direct Material, Direct Labor, FOH Joint Product A(a) Direct Material Direct Labor FOH Joint Product A(b) Direct Material Direct Labor FOH Joint Product A(c) Direct Material Direct Labor FOH By Product Requiring no further process By Product Requiring further process

4. Bases of Cost Allocation Physical Quantity RatioSelling Price Ratio Hypothetical Market Value Ratio

5. Example Physical quantity method Cost Allocation at Split Off Point 1960 liter fresh milk put in the process Skim Milk 1,000 Liter Cream 500 Liter Butter 200 Liter Ghee 100 Liter Yogurt60 Liter Miscellaneous 100 Liter 1960 Cost incurred on 1960 liter milk is Rs 15,680

6. Solution Skim Milk = 15,680 / 1960 x 1000 = 8,000 Cream = 15,680 / 1960 x 500 = 4,000 Butter = 15,680 / 1960 x 200 = 1,600 Ghee = 15,680 / 1960 x 100 = 800 Yogurt = 15,680 / 1960 x 60 = 480 Miscellaneous = 15,680 / 1960 x 100 = 800

7. Example Cost incurred in the department Rs 7,000 Drum stick Rs. 4 per gram Breast pieces Rs. 6 per gram Wings Rs. 3 per gram Miscellaneous Rs. 2 per gram

8. Example Drum stick 20,000 X 4 = 80,000 Breast pieces 10,000 X 6 = 60,000 Wings 6,000 X 3 = 18,000 Miscellaneous 4,000 X 2 = 8,000 1,66,000

9. Solution Drum stick = 70,000 / 1,66,000 x 80,000 = 33,735 Breast pieces = 70,000 / 1,66,000 x 60,000 = 25,300 Wings = 70,000 / 1,66,000 x 18,000 = 7,590 Miscellaneous= 70,000 / 1,66,000 x 8,000 = 3,375 70,000

10. Total quantity produced 4,000 grams Drum stick20,000 Breast pieces 10,000 Wings6,000 Miscellaneous 4,000 40,000 Drum stick = 70,000 / 40,000 x 20,000 = 35,000 Breast pieces = 70,000 / 40,000 x 10,000 = 17,500 Wings = 70,000 / 40,000 x 6000 = 10,500 Miscellaneous= 70,000 / 40,000 x 4000 = 7,000 70,000 Physical Quantity Ratio

11. Miscellaneous Sales = 2 x 4000 = 8,000 Less Cost 7,000 1,000 Sales = 2 x 4000 = 8,000 Less Cost 3,375 4,625